SL Green Realty Corp. plans to acquire Eleven Madison Avenue, a 29-story, 2.3 million-square-foot Class A building in Manhattan’s Midtown South market, for $2.3 billion in what is expected to be another record-setting deal for a New York City office tower.

The definitive agreement announced Monday calls for SL Green, already the city’s largest office landlord, to pay $2.3 billion plus approximately $300 million in lease-stipulated improvement costs to the owners, a joint venture of The Sapir Organization and CIM Group. The deal is expected to close in the third quarter.

It would also be the second biggest deal for a U.S. office building since 2008, when Boston Properties bought the GM building at 767 Fifth Ave. for $2.8 billion from Harry Macklowe.

Coming about five months after the previous record deal of $2.2 billion that Ivanhoé Cambridge and Callahan Capital Properties paid for the 1.2 million-square-foot Three Bryant Park office tower, it’s another sign that Manhattan’s commercial real estate market is on fire. In February, Norges Bank Investment Management acquired a 45 percent interest in 11 Times Square, a 1.1 million-square-foot office and retail tower in Midtown that was valued at $1.4 billion. Earlier this month, RXR Realty paid $1.2 billion for 230 Park Ave., a 1.4 million-square-foot office building that had been owned by a joint venture of Invesco and Monday Properties.

“It’s a large price tag but is highly complementary to their strategy of beefing up Midtown South exposures,” Mitch Germain, a managing director and analyst who covers SL Green for JMP Securities, told Commercial Property Executive. “Midtown South is one of the tightest office markets in the country and demand from tech/media tenants is not likely to change any time soon.”

The Sapir Organization has owned the Art Deco building across from Madison Square Park since 2003, when it paid $675 million for the property built in 1929. Los Angeles-based CIM Group bought a 49 percent stake in 2010 for a reported $469 million.

“After the past two years of repositioning the asset and value creation through leadership and renovations, we are pleased to consummate this sale with SL Green,” Alex Sapir, president of the Sapir Organization, said in a joint release. “We trust that they will continue to own and operate this trophy asset in the same manner that we have over the past 12 years.”

The building was originally the headquarters of Metropolitan Life Insurance Co. After a $700 million modernization in the 1990s, it became the North American headquarters of Credit Suisse, which is still the building’s largest tenant. Sony, which sold its own headquarters at 550 Madison Ave. for $1.1 billion in 2013, plans to lease about 500,000 square feet at Eleven Madison Avenue for its new U.S. headquarters. Other tenants are Yelp, Young & Rubicam, William Morris Endeavor Entertainment, Fidelity Investments and the Eleven Madison Park restaurant, which has earned Three Stars from the Michelin Guide.

“Eleven Madison Avenue is one of the best assets in New York City’s vibrant Midtown South submarket, with floor-plate sizes, amenities and a robust infrastructure that are truly unique to the area,” SL Green Co-Chief Investment Officer Investment Officer Isaac Zion said in the release. “Occupying a full block across from Madison Square Park, the building has direct connectivity to One Madison Avenue, a 1.2 million-square-foot building that is leased to Credit Suisse and also owned by SL Green.”

Germain said the air rights at One Madison Avenue, “could offer an appealing redevelopment opportunity down the line. Given that some of the leases are locked in long term, the air rights don’t seem to fit in the equation in the near term.”

SL Green currently holds interests in 117 Manhattan buildings totaling 43.6 million square feet as well as ownership interests in 37 suburban properties totaling an additional 5.9 million square feet. The REIT is close to securing final approvals from New York City for construction of a 63-story, 1.6 million-square-foot office tower at One Vanderbilt Ave. across from Grand Central Terminal. SL Green has agreed to make $220 million in transit improvements as part of a deal with city officials to move the project forward. It is expected to be completed by 2020.

Asked whether SL Green’s active acquisition and development schedule could overtax the REIT, Germain said he had high regards for the team and felt the balance sheet had sufficient capacity to handle the latest deal.

“We expect SLG will leverage its joint venture relationships and take on a partner in Eleven Madison and possibly couple that with the other asset (One Madison Ave.) in order to alleviate funding needs,” Germain told CPE. “This will also bring in asset management fees to increase return potential of the investment.”

The law firm of Greenberg Traurig, L.L.P. represented SL Green in the transaction. The seller was represented by Darcy Stacom and Bill Shanahan of CBRE, Inc., and the law firm of DLA Piper (U.S.).